W.R. Grace swings to Q4 loss, but core improves

SaabiraChaudhuri

W.R. Grace & Co.
GRA, -0.80%
swung to a fourth-quarter loss as the specialty chemical company was weighed down by a large charge stemming from its asbestos-related liability, however core earnings improved.

For the current year, the company expects adjusted earnings before interest and taxes of $560 million to $580 million amid consolidated sales of $3.2 billion to $3.3 billion. Analysts polled by Thomson Reuters recently expected sales of $3.3 billion.

W.R. Grace last year raised prices for its products, which range from catalysts employed by oil refineries to help convert crude oil into gasoline to concrete bonding agents used in construction. While rising raw materials costs have been a significant driver for price hikes, the increases have also come alongside the launch of new products, such as those with sharply reduced use of industrial minerals known as rare earths. Prices of the minerals, which are mostly produced in China, can be volatile.

Chief Executive Officer Fred Festa said all three of the company's operating segments demonstrated "solid organic growth and strong increases in operating earnings."

For the quarter, W.R. Grace reported that, in the catalysts technologies segment sales fell 11%, although operating income climbed 5.9%. In the materials technologies segment sales were up 2.7% and operating income 20%. Meanwhile in construction products, sales rose 2.3%, while operating income jumped 53%.

W.R. Grace noted that sales in emerging regions represented over 39% of sales and grew by over 16% compared with the prior-year quarter.

The company is looking to emerge from a bankruptcy process that began in 2001, driven by fear of an onslaught of claims for injuries due to W.R. Grace-made asbestos projects.

Last month, W.R. Grace said it would record a smaller-than-expected $365 million pretax charge in the fourth quarter related to its increased asbestos-related liability. At the time, the company also said it was adjusting its recorded asbestos-related liability to $2.07 billion from $1.7 billion. The company has noted that the adjustment is necessary to reflect increased estimates of the settlement values of the warrant and deferred payment obligation payable to the asbestos personal injury trust under its reorganization plan.

Overall, the company reported a loss of $111.6 million, or $1.48 a share, versus a profit of $58.1 million, or 77 cents a share, a year earlier. Excluding one-time items like the asbestos-related charge, earnings were $1.11 compared with 89 cents a year earlier.

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